Malaysia Friday announced plans to beef up corporate governance at government-linked companies that may lead to top-level changes at some of the country's biggest companies.
In announcing the reforms, Prime Minister Abdullah Ahmad Badawi said that reforming the GLCs, which account for 36% of the stock exchange's market capitalization, is critical to strengthening the corporate sector in the face of growing overseas competition.
Badawi said he expects government-linked companies to have strong management that is accountable to a board of directors with enhanced powers.
Malaysian state-owned companies have historically been dumping ground for civil servants and political favorites.
Under Abdullah's leadership, Malaysia is attempting to move away from such a system so that local companies have stronger balance sheets and can then expand overseas. Separately, Malaysia has also been beefing up its corporate laws, moving to cut the boards of listed companies to 10 directors and separating the roles of chairman and chief executive.
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